Greek terminal alleged to be breaching EU and national laws gets more EU grant millions: The Alexandroupolis FSRU, scheduled to become Greece’s first floating LNG import terminal in early 2024, has been awarded a new €106 million (US$111 million) grant from EU funding sources to support the completion of its construction following approval from the European Commission. The 5.5 billion cubic meters per year project has been estimated to cost €360 million, though previously confirmed financing — a €166.7 million grant from EU Funds and a €283 million bond issue arranged by the National Bank of Greece — indicates that overall costs have soared. The awarding of this latest EU subsidy follows a legal appeal lodged with the Greek government by WWF Greece and Greenpeace calling for the cancellation of the recent renewal of the project’s environmental permit, which was originally issued in 2013. Since then, the groups contend, the maritime area within which the Alexandroupolis FSRU and another floating terminal are proposed to be sited has been designated as a Natura 2000 site, protected under EU law. Potentially hazardous industrial installations within Natura 2000 sites are prohibited by national law, a point overlooked in the new permitting that was granted without the due public consultation required by both EU and national law, the groups allege. In addition, the FSRU will connect to the gas grid via a 28-kilometer long pipeline, the onshore section of which is supposed to terminate at the village of Amfitriti, which lies adjacent to areas of land scorched by the massive wildfires that swept across the Evros region for more than two weeks in August. (Offshore Energy, WWF, GEM.wiki) 

Methane deal gathers momentum amid mixed messages in Abu Dhabi: A “phase down” of fossil fuels, the scaling up of carbon capture and storage, and — most significantly — an as yet unfinalized pledge from more than 20 fossil fuel-intensive companies to eliminate methane emissions and gas flaring by 2030 were the talk of this year’s Abu Dhabi oil and gas exhibition and conference. In a PR offensive ahead of next month's UN climate summit, COP28 president-designate Sultan al-Jaber indicated that companies accounting for a quarter of all oil and gas production, and including both international and national oil companies, would be ready to formally pledge to the methane reduction commitment and a 2050 net zero emissions goal at COP28. Jaber did not provide the names of the companies with whom he is in “active talks” but they are unlikely to include Russian companies. A pre-COP report from the UN includes a formal submission from Russia that says it will oppose a global deal to reduce the use of fossil fuels. In a further indication of the obstacles to decarbonization that lie ahead at COP28 and beyond, leading industry voices at the conference, including the energy minister of the United Arab Emirates, spoke openly about the need for expanded investment in the oil and gas sector. (Bloomberg, The Financial Times, Reuters, The Financial Times [Paywall])

Eni makes significant gas discovery in Indonesia: The Italian energy firm said it is hoping to quickly develop a new discovery 85 kilometers off the coast of East Kalimantan that it estimates to hold 5 trillion cubic feet (tcf) of gas, or roughly 140 billion cubic meters (bcm). Indonesia’s now closed Arun field was once Asia’s largest gas field, with estimated reserves of roughly 383 bcm. The discovery at the Geng North-1 exploration well is reported to be at least matched by 5 tcf of gas present in undeveloped discoveries within the same area. Eni said there was now potential to create a new production hub in the northern part of the Kutei Basin that would connect to the existing LNG facilities at Bontang on the coast of East Kalimantan. Having announced in June its acquisition of Neptune Energy, which operates in the same basin, the Italian company said that the ongoing exploration campaign is in line with its strategy to shift its portfolio mix towards gas and LNG, targeting 60% in 2030, and to increase its LNG equity portfolio. (Eni, Reuters)

China lays out plan to “orderly advance the use of natural gas”: Balancing increased domestic gas usage to contribute to the 2060 carbon-neutral goal with efforts to avoid supply or price shocks is the central theme of a new draft policy from China’s National Energy Administration. The prescription for an “orderly” boost to gas consumption includes proposals to take account of regional differences in seasonal gas demand and to discourage use of the fuel for power generation in regions where coal remains dominant such as Inner Mongolia, Shaanxi, and Xinjiang. While gas-based manufacturing of methanol and other petrochemicals is to be restricted, the draft policy also calls for accelerated construction of infrastructure to improve the reliability of gas supply and for suppliers and users to forge long-term supply contracts. (Reuters)

Delay on U.S. hydrogen rules: Rules and criteria being drawn up by the U.S. government to determine the award of tax incentives for hydrogen projects are being held up due to apparent concerns within federal agencies that they will attract lawsuits when published. The Treasury Department was due to announce the rules in mid-August, and the ongoing delay is said to be upsetting project developers keen to make investment decisions. Green hydrogen producers are awaiting clarity on what level of subsidy they will be eligible for via funding allocations made available under the Inflation Reduction Act passed last year, while concerted lobbying from the fossil fuel industry is aiming to widen the scope of tax credit eligibility to include blue hydrogen produced from gas and carbon capture and storage. (Hydrogen Insight, E&E News)

Colombia’s exploration ban stimulates increased extraction on existing contracts: The Colombian government may have introduced a ban on new oil and gas exploration projects earlier this year, but there are indications that companies are doubling down on existing contracts to ramp up gas extraction. This comes amid concerns over declining gas reserves that are estimated to have just over seven years of production remaining. The country’s largest producer, state-owned Ecopetrol, has said it is planning to expand output off the Caribbean coast. Meanwhile, NG Energy International has its eyes on a 20% share of the national gas market in the coming years, to be driven by its Sinu-9 block coming online next year. The Canada-based company is also pinning its hopes on the development of new pipeline infrastructure to get gas to market. (Bloomberg)

Austria: OMV has signed a five-year supply agreement with Norway’s Equinor for additional gas volumes as Austria seeks to reduce its dependence on Russian gas. 

Cyprus: Construction of the €200 million (US$210 million) Mari gas power plant has been halted by the Department of the Environment due to permitting and environmental concerns. 

Egypt: Despite ongoing power cuts and growing domestic demand for gas, petroleum minister Tarek El Molla said that LNG exporting will restart this month as planned.

Iraq: Plans for a gas pipeline that would supply Europe are under discussion with initial project designs reported to have been drafted by an unnamed Italian company.  

Italy: Rome has begun talks with the state government of Bavaria to supply gas and hydrogen via an extension of the Adriatica pipeline with Austria and Hungary also being viewed as potential customers. 

Italy: Ahead of a final agreement, ExxonMobil has selected investment giant BlackRock as the potential buyer for its majority stake in the Adriatic LNG Terminal, Italy’s main LNG import facility.

Qatar: A glitzy ceremony marked the start of construction on QatarEnergy’s North Field Expansion LNG facility, set to become the world’s largest LNG project and scheduled to start up in 2026.

Ukraine: State-owned Naftogaz announced that it has started extraction at a further five new gas wells that will produce approximately 500,000 cubic meters per day.

U.S.: The first half of 2023 saw U.S. gas exports surge to record high levels, according to data from the U.S. Energy Information Administration, with the 4% increase on the first half of 2022 mainly driven by LNG exports. 
 

TotalEnergies gets offshore drilling green light in South Africa: An appeal from 18 individuals and environmental groups has been dismissed by South Africa’s Forestry, Fisheries and Environment Minister Barbara Creecy who has granted approval for TotalEnergies to conduct exploratory drilling for gas and oil off the country’s southwest coast. The French major, with partners Shell and national oil company PetroSA, will now proceed with a ten-month drilling campaign spanning 10,000 square kilometers in Block 5/6/7. Earlier environmental authorization from the ministry was challenged on numerous grounds including climate change and air pollution impact, as well as adverse socioeconomic implications for tourism and fisheries. Further court challenges are expected to follow. One of the appellants, Climate Justice Charter Movement, said Creecy’s decision was “irrational and ignores climate science.” In France, four environmental groups have launched legal action against TotalEnergies over the “climaticide” impacts of its proposed US$3.5 billion East African Crude Oil Pipeline project in Uganda and other recently sanctioned fossil fuel projects. (News24, Reuters, Reuters)  

Deal reached on Venezuela’s Dragon field after U.S relaxes sanctions: Venezuela and Trinidad and Tobago have signed an inter-institutional accord to develop the 4 tcf Dragon field in Venezuelan waters. The two governments began negotiations on the field earlier this year, after the U.S. Treasury Department’s Office of Foreign Assets Control granted Trinidad and Tobago an exemption from U.S. sanctions on investment in Venezuela’s oil and gas industry in order to facilitate development of Dragon under a license that is due to last initially for only two years. Shell will be involved in the project, and indications have surfaced that other European companies are looking to further tap Venezuela’s reserves. In a separate deal, Shell and Trinidad and Tobago’s National Gas Company have finalized an agreement to exploit the Manatee field in Trinidanian waters, with first gas hoped for in 2028. (Energy Voice, Offshore Technology)

Saudi Aramco dips its toe into LNG: “Aramco’s intention is to become a leading global LNG player,” said Nasir Al-Naimi, head of the Saudi oil and gas company’s upstream division, following the announcement of its first international investment in LNG, the acquisition of a minority stake in MidOcean Energy for approximately US$500 million. Viewed as a belated move by Aramco into the sector, it still requires regulatory approval, particularly in Australia. MidOcean is in the process of acquiring stakes in five Australian LNG projects. The Aramco deal, therefore, would see it take indirect stakes in all of those projects that together represent more than half of Australia’s gas export capacity. Aramco is also reported to have been in investment talks with U.S. LNG exporters this year, though there are so far no indications of deals emerging. (Reuters, Bloomberg, Australian Financial Review)

Exxon’s LNG plans in Mozambique quietly advance: Amid mounting speculation that TotalEnergies could lift force majeure on its Mozambique LNG project in the Cabo Delgado province before the end of the year, ExxonMobil is advancing its less high profile Rovuma LNG export facility, which has also been paused for the last two and a half years due to security issues in the region. In March this year, Exxon announced that it was pursuing a new design for the facility involving twelve 1.5 million tonnes per annum (mtpa) modular LNG trains with a total capacity of 18 mtpa, rather than two 7.6-mtpa trains. The company has recently issued invitations to tender for the front-end engineering and design (FEED) on the project’s liquefaction modules to Italy’s Saipem, Bechtel of the U.S., and a partnership of Japan’s JGC and France’s Technip Energies. According to Upstream reporting, Exxon has insisted that the three bidders consider the impacts on capacity in the global supply chain resulting from the upcoming award of the massive new construction contract for the North Field Expansion project in Qatar. Should the FEED work conclude in 2024, Rovuma could come online in 2027 or 2028. (Upstream [Paywall], GEM.wiki)

Czech Republic renationalizes debt-ridden gas transmission operator: On the instruction of the government, state-owned electricity transmission grid operator ČEPS has acquired Net4Gas for approximately €200 million (US$210 million) from overseas private investors who bought the company from RWE in 2013 for €1.6 billion. Net4Gas operates roughly 4,000 kilometers of pipelines that have shipped gas to and from Germany and Slovakia and for domestic consumption, but its revenues have been badly hit since last year when flows of Russian gas largely dried up. It currently has debts of more than €1.3 billion that have to be paid back between 2025 and 2028. Nevertheless, the Czech industry ministry has justified the renationalization as being essential for the country's energy security and flagged the potential for Net4Gas's infrastructure to be part of a future hydrogen corridor from Ukraine via Slovakia and Czech Republic to Germany, a project that would likely attract substantial EU public funding. (Reuters, Upstream)

Russian gas transit through Ukraine, Center on Global Energy Policy at Columbia University, October 3, 2023.

This online Q&A discusses why reduced but still substantial transit flows of Russian gas through Ukraine remain at considerable risk.